Individual Retirement Accounts are quite popular. It probably wouldn’t be surprising if you inherited an IRA someday. But what should you do with it?

First of all, you’ll need to be aware of some basic rules. If your parent, or anyone other than your spouse, leaves you a traditional IRA — one in which contributions are typically tax-deductible and earnings can grow tax-deferred — you can transfer the money into an “inherited IRA,” from which you’ll need to take at least a minimum amount of money — technically called a “distribution” — each year, based on your life expectancy.

These distributions are taxable at your regular income tax rate. If you’ve inherited a Roth IRA, you also must take these minimum payouts, but the amounts won’t count as taxable income, because your parents, or whoever left you the IRA, already paid taxes on the contributions that went into it. To make sure you fully understand all the guidelines on distributions and taxation of inherited IRAs, consult with your tax advisor.

It’s also important to understand how your inherited IRA will fit in to your overall financial strategy. Consequently, you’ll need to address these questions:

How much should I take out each year? As mentioned above, you must take a distribution of at least a minimum amount from your inherited IRA each year — if you don’t, you may be subject to a 50 percent penalty on the amount you should have taken. But you can take out more than the minimum. In deciding how much to take, you’ll need to evaluate a few factors. First, of course, is whether you need the extra money to help support your regular cash flow. It’s possible you have other pools of income from which to draw, and, in some cases, it may be advantageous for you to tap these sources first. Another consideration is taxes — if you’ve inherited a traditional IRA, the more you take out each year, the bigger your tax bill may be.

Should I keep the same investments? Inheriting an IRA doesn’t mean you’re stuck with the original account owner’s investment choices. You can change the investments to align with your goals and risk tolerance, both of which may change over time.

The person who left you an IRA worked hard for that money and thought enough of you to pass it on. Consequently, you’ll want to respect this inheritance — and get the most out of it for as long as you can.

This article was written by Edward Jones for use by Chet Osterhoudt, a financial adviser for Edward Jones in Nashville.